Borr Drilling: November 2019 Fleet Status Report Analysis

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Borr Drilling: November 2019 Fleet Status Report Analysis

Borr Drilling (BORR) has just provided its new fleet status report. It’s been a while since we last heard about the company’s contracts, so let’s get straight to the news:

  1. Jack-up Prospector 1 got a new contract in Netherlands with Total (TOT). The rig will work from November 2019 to February 2020.
  2. Jack-up Galar got a new contract with PEMEX in Mexico. The rig will work from February 2020 to July 2021. Bassoe Offshore estimates that the dayrate is $94,000.
  3. Jack-up Njord got a new contract with PEMEX in Mexico. Just like Galar, the rig will work from February 2020 to July 2021. Bassoe’s dayrate estimate is the same – $94,000.
  4. Jack-up Idun got a new contract in Vietnam. The rig will work from November 2019 to February 2020.
  5. Jack-up Frigg got a contract extension in Nigeria. The rig will work from December 2019 to November 2020. The dayrate is estimated at $95,000.
  6. Jack-up Mist got a contract extension in Malaysia. The rig will work from December 2019 to April 2020. The dayrate is estimated at $75,000.




Source: Borr Drilling fleet status report

This was a busy report from Borr Drilling. The company had to score new contracts as it has plenty of newbuilds – and it was able to accomplish this task. Galar, Njord and Frigg got long-term contracts, which is especially important for Borr Drilling since it still has 6 available premium jack-ups and 7 newbuilds without contracts. All the newbuilds are set to be delivered in 2020, starting with Heimdal in January 2020 and ending with Var in December 2020. At this point, it looks like Borr’s strategy is working. The premium jack-up market experiences upside, and the company is able to put more jack-ups to work.

It is no surprise that Borr Drilling’s shares have recently fared better than most offshore drilling stocks. While the ultra-deepwater market is lagging, the premium jack-up market is recovering, and in my opinion, Borr is set to put more rigs to work in the near term. In the second quarter report, Borr Drilling stated that it expected that Q3 EBITDA will cover all operational and financial costs of the fleet. As more rigs are put to work, the company’s financial performance will obviously have more upside, although it won’t be visible in the Q3 2019 report.

All in all, I maintain my long-term bullish stance on Borr Drilling. The company’s strategy is working: the premium jack-up market continues to rebound, and Borr is able to put its rigs to work. In the short-term, Borr shares may develop upside momentum above $7.00 if oil prices cooperate.

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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BORR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I may trade any of the above-mentioned stocks.

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